1 July 2024
Over this past weekend, Bitcoin (BTC) experienced a significant rally, pushing its price above $63,000—an increase of 5.6% since hitting a low below $60,000 on Friday. This unexpected surge occurred despite a lack of major news triggers, leading to speculations and analyses concerning the underlying causes. Here’s a deep dive into three key factors that might explain this weekend’s price action.
#1 Mysterious Bitcoin Whale Activity
According to DeFi^2 (@DefiSquared), the number one ranked trader on Bybit and a leading wallet on DeBank, a mysterious “whale” has been active in the Binance perpetual futures market. DeFi^2 noted significant buying activity from this entity, stating, “Since the local BTC lows on Friday, almost the entire bounce this weekend is from a single entity on Binance Perps that has hammered over $450 million in buys in 500 BTC blocks at a time during the lowest liquidity hours of the market.”
DeFi^2’s analysis sparked speculations about the whale’s potential strategies, especially considering the impending Mt. Gox distribution, which could further influence Bitcoin’s liquidity and price stability. He elaborated, “Curious what the endgame is right before the start of Mt Gox distribution. With a position of this size, in order to exit they’ll either need to run the market high enough to cause a short squeeze, or end up becoming a massive cascade risk if the market goes against them.”
#2 Open Interest Build Up
Crypto trader Daan Crypto Trades (@DaanCrypto) provided insights into how the futures market contributed to Bitcoin’s price movements. His focus was on the relationship between open interest and market price, a critical indicator of market sentiment and potential future volatility.
“During this run up, we’ve mostly seen Open Interest rise with a few relatively small short squeezes and some long profit taking in between. I think there’s a lot of underwater shorts from the ~$60K region that should get squeezed out if price were to keep grinding higher. That $65K region is still a big area to watch out for,” Daan wrote.
Interestingly, open interest on Bitcoin increased from $30.97 billion on Saturday to $32.21 billion by Monday, based on data from Coinglass. Despite this rise in open interest, the weekend did not see substantial short squeezes. The liquidation of only $35 million in BTC shorts during this period was relatively modest compared to past events, such as on May 20 when the price surge from $66,000 to $71,500 resulted in $84.2 million in short liquidations.
#3 Technical Breakout
Another contributing factor was likely a technical breakout for Bitcoin, which shifted the market momentum. Popular crypto analyst CRG (@MacroCRG) described the weekend’s price movement as a “beauty of a breakout.” He highlighted that both funding rates and the perpetual futures basis remained flat, which usually precedes a strong market move.
“That’s a beauty of a breakout. Funding + perps basis flat. Weekly close in 1H + weekly candle is a ginormous pinbar with an 8% wick (high probability reversal candle). Full send,” he stated.
The technical analysis shows Bitcoin breaking a descending trendline that has been in place since it peaked at about $72,000 in early June. The break through this trendline on the 4-hour Binance chart, as noted by CRG, signals a potential reversal from the recent bearish trend.
Moreover, the BTC weekly close presents a significant bullish signal—a large pinbar candle with an 8% wick—indicating potential for upward movement.
At press time, BTC traded at $63,232.